Common Fears About Social Security and How to Mitigate Them

One of the most significant fears many aging Americans face is that Social Security retirement benefits will disappear. With continuous news about potential solvency issues, sustainability concerns, and funding concerns, it’s no surprise that apprehensions are often heightened. This article aims to reduce these anxieties by discussing common questions related to fears about Social Security.

Will Social Security run out of money?

The first fear is that Social Security retirement can run out of money. The Social Security trustees report has projected that the trust fund reserves may be depleted by 2034. Once the reserves are depleted, Social Security can only pay about 79% of promised benefits. While this might sound alarming, it does not mean Social Security can disappear. It merely suggests the program might have to cut benefits if Congress doesn’t act to bolster the program’s finances.

• How to mitigate this fear- Empower yourself with information and planning and stay on top of legislation that may affect Social Security. Make your voice heard regarding Social Security by voting and contacting your representatives. Also, consider factors you can control, such as saving more for retirement and exploring other retirement income sources.

 Will I receive what I paid?

The second common fear is that one may not receive what they paid into Social Security. Many believe they must live to a certain age to “break even.” However, it’s essential to remember that Social Security is not an investment but insurance—a strategy to help safeguard against poverty in old age.

• How to mitigate this fear- This fear can be mitigated by understanding that Social Security benefits extend beyond individual contributions. It provides lifetime income that adjusts for inflation and survivor benefits for spouses and dependents. Because it is insurance, it is less volatile than investment strategies.

Consider purchasing an annuity. An annuity is an insurance that can protect against longevity, investment, and inflation risk. It is a contract between an insurance company and the purchaser requiring the issuer to pay out a fixed income stream to the beneficiary immediately or at some point in the future.

Will I be eligible for Social Security retirement benefits?

Another fear is that one will not be eligible for Social Security retirement benefits. To qualify, you must earn at least 40 credits—the equivalent of working and paying Social Security taxes for ten years. However, most people who have worked for a decade are eligible.

• How to mitigate this fear- Check your Social Security statement annually online to help ensure you’re on track toward the eligibility requirement. If you’re not, you may still have plenty of time to earn the required credits if you continue working.

Should I start taking benefits now or later?

Fears often arise concerning when to start claiming Social Security retirement benefits. The decision is complicated and highly individualized, influenced by life expectancy, financial situation, health, and personal preferences.

• How to mitigate this fear- Discuss the appropriate time for you to start benefits with a financial professional who can help you analyze different scenarios so you can make an informed decision. Remember, deciding requires understanding your situation and the implications of the various choices.

In conclusion

While fears about Social Security retirement are understandable, being informed and taking proactive steps can significantly mitigate these concerns. While it is crucial to consider Social Security in your retirement planning, it should not be the only plan. Saving independently, exploring other income sources, and strategizing when to claim benefits can go a long way in ensuring financial stability in retirement.

Disclosure

SWG3742682-0724c This information is provided as general information and is not intended to be specific financial guidance. Before you make any decisions regarding your personal financial situation, you should consult a financial or tax professional to discuss your individual circumstances and objectives. The sources used to prepare this material are believed to be true, accurate and reliable, but are not guaranteed. The information provided in this blog is for informational purposes only and should not be considered as official guidance or advice from the Social Security Administration (SSA). While we strive to provide accurate and up-to-date information, we are not affiliated with the SSA, and the content presented here may not always reflect the most current policies or regulations of the SSA. Therefore, readers are encouraged to verify any information provided here with official sources or consult with qualified professionals for personalized guidance regarding Social Security matters. 

An annuity is intended to be a long-term, tax-deferred retirement vehicle. Earnings are taxable as ordinary income when distributed, and if withdrawn before age 59½, may be subject to a 10% federal tax penalty. If the annuity will fund an IRA or other tax qualified plan, the tax deferral feature offers no additional value. Qualified distributions from a Roth IRA are generally excluded from gross income, but taxes and penalties may apply to non-qualified distributions. Consult a tax advisor for specific information.

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